Profit at Transcorp Power Plc is projected to climb to about N114 billion in 2026, as higher generation capacity and stronger energy output help offset persistent cost pressures in Nigeria’s power sector, according to analysts at Lagos-based consultancy Meristem.
The analysts estimate profit after tax will rise to N113.8 billion in the 2026 financial year, up from N91.4 billion recorded in 2025, supported by a planned increase in available capacity to 750 megawatts from 550 megawatts currently.
The growth outlook follows a robust 2025 performance in which revenue jumped 30 percent year-on-year to N398.3 billion, driven by an expansion in generation capacity to 550 megawatts from 417 megawatts after the rehabilitation of a key gas turbine unit.
Energy-delivered revenue surged nearly 43 percent to N293.9 billion, reflecting stronger dispatch volumes, while capacity-charge revenue posted modest growth.
The planned capacity ramp-up is expected to further lift energy sales in 2026, with analysts projecting revenue growth of about 26 percent to N503.1 billion. A strategic gas supply partnership between parent Transnational Corporation and Heirs Energy is also seen as bolstering the reliability of fuel supply, a critical factor for thermal generation companies.
“We expect stronger revenue performance to offset cost intensity and help maintain stable profit margins. Additionally, the anticipated bond-backed settlement of GenCos’ receivables could improve liquidity and cash conversion significantly,” the analysts said in a note on Tuesday.
“This could accelerate the ongoing deleveraging trend and moderate finance cost pressures, strengthening the company’s bottom line overall. Consequently, we project a profit after tax of N113.81 billion in 2026FY.”
Even so, profitability gains may remain constrained by elevated input costs.
Gas prices rose sharply in 2025 to an average of $3.52 per MMBtu from $2.26 a year earlier, contributing to a 32 percent increase in cost of sales. While gross profit expanded in absolute terms, margins narrowed slightly as costs outpaced topline growth.
Operating expenses more than doubled during the year due to new intragroup service charges and impairment losses, compressing the operating margin to 31 percent.
Finance costs also trended higher amid Nigeria’s elevated interest rate environment, with borrowing rates at the commercial banks ranging between 28.5 percent and 30 percent in 2025. Although total debt declined following the repayment of an N11.25 billion loan, weaker finance income and higher rates lifted net finance costs.
Still, analysts expect stronger revenue momentum in 2026 to cushion margin pressures and support earnings growth. Improved scale and operational efficiency are anticipated to help stabilise profitability even if gas prices remain firm and management fees persist within the group structure.
Liquidity remains a key watch point. Trade receivables rose 57 percent to N468.4 billion in 2025, reflecting delayed settlements within the Nigerian power market, particularly from the bulk trader. Receivables days stretched beyond 350 days, weighing on cash conversion metrics.
However, a proposed bond-backed settlement for generation companies’ outstanding receivables could materially improve cash flows across the sector if implemented. For Transcorp Power, that would likely accelerate deleveraging, moderate finance cost pressures, and strengthen earnings quality.
The company ended 2025 with improved debt metrics, as total borrowings fell 18 percent year-on-year to N30.7 billion, reducing balance sheet risk and supporting interest coverage of nearly 12 times.
With capacity expansion underway and gas supply arrangements expected to underpin output, Transcorp Power’s earnings trajectory in 2026 will largely depend on how effectively higher volumes offset structural cost and liquidity constraints that continue to define Nigeria’s electricity market.